Labor: Wal-Mart Stores v. Dukes—The defense should not rest

Many viewed the U.S. Supreme Court's June 2011 ruling in Wal-Mart Stores v. Dukes as a panacea for the defense bar in defeating employee class actions. In Dukes, the Supreme Court vacated certification of a nationwide class in a gender discrimination context. The court ruled that the plaintiffs had not shown that they shared common issues of law or fact. Clearly, the optimistic view of the ruling expressed by many has turned out not to be the case; the government has been no less vigorous in pursuing recoveries on behalf of classes of employees, and a number of courts have certified classes in 2011 and again this year.

For example, the U.S. Department of Labor (DOL) announced on May 1 that Wal-Mart had settled a Fair Labor Standards Act (FLSA) matter for $5.29 million that involved back overtime for the period from June 2004 through March 2007. According to the DOL, the investigation involved current and former vision center managers and asset protection coordinators at Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam's Club warehouses who were owed overtime compensation.

While FLSA class standards vary significantly from those in the context of federal anti-discrimination laws involved in Dukes, the DOL's action makes it clear that Wal-Mart remains in the sights of the federal government, if not those of the states and localities.

On May 18, the California Supreme Court agreed to hear an appeal from a class of bank employees whose class was decertified in light of Dukes. The employee bank officers of the U.S. Bank Association contended they were entitled to class status under California law because they were deprived of overtime and lunch and rest breaks. The association challenged certification on the grounds, reflecting the Supreme Court's Dukes decision, that the plaintiffs could show neither common issues of law and fact nor that their claims typified the class. Following Dukes, aCalifornia appeals court vacated the class that had been certified by theCalifornia trial court. The Supreme Court of California is now reviewing the case.

Similarly, on May 31, a federal court in Marylandconditionally certified an FLSA class involving failure to pay overtime allegations. The case involves loan officers of Prosperity Mortgage Co. The court specifically rejected Dukes as a basis for declining to certify the class, reasoning that the loan officers had demonstrated, at least preliminarily, that they share duties and that PMC had a policy that expressly classified them (perhaps erroneously) as exempt from the FLSA.

On March 2, the U.S. District Court for the Northern District of Illinois found that Dukes was not an obstacle to certifying a class for alleged violations of the Illinois Minimum Wage Law brought against AppleIllinois LLC d/b/a Applebee's Neighborhood Bar & Grill. A group of tipped employees contended that they were paid less than minimum tip wages and that Applebee's had fallen short of paying them a minimum wage by not satisfying the tip credit law.

A federal judge in New Yorkon January 3 conditionally certified a class of audit associates at KPMG, finding that the plaintiffs appear to be able to demonstrate a violation of overtime laws. Judge Colleen McMahon ruled that Dukes is inapplicable to FLSA actions.

Lastly, on January 27, the 7th Circuit upheld the certification of two classes of employees who asserted they had been denied overtime pay. The court found that these two groups (current and former employees of RBS Citizens N.A. that included bank tellers, personal bankers and assistant branch managers) had satisfied the Dukes standard by demonstrating commonality.

In short, Wal-Mart may have won the battle, but the class action wars continue unabated.